“Hey are you set up with lightning? To send and receive lightning payments?”

The day I held the Lightning Torch was the day I learned how the lightning network works.

Living in Venezuela, the experimental payments network had somehow skipped my Twitter feed until I received the following message from renowned crypto advisor Jill Carlson.

She had the Torch and she wanted me to join.

I quickly came up to speed on the new game, and why it was attracting an increasing number of bitcoin users. (You can read here how it’s grown from a simple Twitter experiment to a payment that has now reached participants in over 50 countries.)

The Lightning Network Torch – better known by the Twitter hashtag #LNTorch – is a symbolic transaction, meant to teach how this new form of payment lets you send bitcoin faster and without paying fees on the blockchain every time.

Being a non-technological person, this didn’t promise to be fun at all. I accepted anyways. (I was also lucky enough to have Carlson as a technical guide through the process.)

Glitch in the Torch

Holding the Torch, however, is the easy part.

To receive the payment, I first needed to download a wallet that worked with Lightning Network (my regular bitcoin wallet wouldn’t do).

In my case, I chose BlueWallet. This allowed me to accept an invoice for the next amount to be paid in the chain (eg. 3,390,000 satoshis), respond to the tweet of the person announcing that holds the torch and wait to be chosen.

The next part wasn’t so simple. Something to take into account is that funding a Lightning wallet can take hours.

While the payment itself is very quick, it took Jill two hours to send the funds to my lightning wallet and another six hours for me to transfer them to the next person. This is due to the very small fees that are charged for each transaction using the Lightning Network.

The payment works when two users create a payment channel on the bitcoin network, and once the channel is created (which can take a while), the network routes the payment from one node to another. This makes the transactions instant on the lightning network layer, but it takes a long while to get there.

While transactions fees are supposed to be practically nonexistent, in reality, various users have complained about losing money while sending transactions using BlueWallet, one of the most commonly used wallets with lightning network integrated.

And in order to hold the torch and pass it on, one must, of course, give away some money. A very low fraction of 0.0001 BTC that will be added to the trust chain. In my case, I was advised to have enough money in the BlueWallet to pay unexpected fees. I was to receive 0.0392 BTC and pay 0.0393 BTC to the next holder.

Even though I didn’t lose money, I came close to it since the application insisted that I lacked enough funds. The lightning fees are supposed to be below 100 satoshis, and I had an extra 300,000 satoshis available to make the payment.

When asked about this error, the BlueWallet team’s response was that the service still has bugs and that users must remember that it’s still in its beta phase.

For someone who has never used the Lightning Network before, this was a quite contrasting experience with more established bitcoin wallets, and definitely more stressful.

The worst part was the uncertainty of whether the funds had been sent properly or if I had “dropped” the torch!

Passing the Payment

Luckily, this didn’t happen.

Not only did the payment go smoothly, but Jill and I were able to send a message about how bitcoin as a technology that can transcend borders.

I felt a sense of responsibility.

This was a platform to shine a light on Venezuela’s situation indeed. That’s why I passed the torch to the project BitBros, a team from Caracas that survived the blackout with an active node using a 12V motorcycle battery.

Since then, the game has helped to spread awareness of projects like @btcven, a Venezuelan initiative that has received help for their fundraising through the Lightning Torch.

As a result, we’re all listed alongside Andreas Antonopoulos, Erik Voorhees and Meltem Demirors on an official website set up by Lightning Torch creator @Hodlnaut that tracks how the payment has been passed.

For now, the count keeps growing. The Lightning Torch has reached to 250 participants in 53 countries, going from 0.0001 BTC to 0.0395 BTC at press time.

But the torch won’t burn forever, as it’s creator assured. “There are only 33 spots left before we reach the limit of 4.29 million satoshi. I expect it to happen within a couple of weeks,” HODLnaut told CoinDesk.

Now that my turn has passed, the overall experience left me with a sense of belonging with the bitcoin community. It was an inspiration to keep learning more about the blockchain world.

Riot Blockchain is planning to launch a regulated crypto exchange in the U.S.

The publicly traded U.S. company that has faced regulatory issues for a sudden pivot to blockchain, revealed in a filing with the U.S. Securities and Exchange Commission (SEC) Friday that the new entity will be called called RiotX and will develop three main services: banking, trading and a digital wallet.

The application follows the firm’s change in business focus after almost two decades in biotech, when it rebranded to Riot Blockchain from Bioptix and shifted focus to crypto mining in October 2017. The firm later acquired a crypto brokerage and said it planned to build an exchange in March 2018.

The company was subpoenaed by the SEC a month later over its sudden shift to a blockchain business model and a resultant stock price hike.

During 2018 and 2019 the company also changed its board of directors, beginning with the resignation of its CEO.

In the SEC filing, made public on March 14, the company explains that the new exchange is expected to be handled by its subsidiary RiotX Holdings Inc, adding that its main focus is still on bitcoin mining.

For RiotX’s banking services, the company says it will launch an API created by software provider SynapseFi. Users will be able to create accounts connected to accredited banking institutions inside the U.S., allowing them to hold and transfer either fiat or crypto assets.

The API will also track the location and identity of users “in order to prevent fraud and improper use of its RiotX exchange”, as explained by the company. This includes the use of the service in U.S. states where crypto exchanges are not legalized, which points to a restricted range of customers to begin with.

As Riot Blockchain explained in the registration:

“SynapseFi’s API will enable to Company to know where the user is when accessing RiotX, thereby enabling the Company to prevent a user from Montana, a state where the exchange of digital currencies is permitted, from traveling to neighboring Wyoming, where the exchange of digital currencies is not permitted, and using RiotX in the prohibited jurisdiction.

Regarding the upcoming trading services, RiotX will be working with exchange software provider Shift Markets, having it terminated its contract with Canadian exchange Coinsquare during the SEC investigation in 2018.

The firm expects RiotX to ultimately operate in all U.S. states bar Hawaii and Wyoming by the end of 2019. At time of registration, the firm claims to already have approval in five states.

Hong Kong-based cryptocurrency exchange Gatecoin will shut down and enter liquidation after an unsuccessful attempt to recover funds lost in a dispute with a former payment services provider.

Announced yesterday, the company distributed the message to customers via their corporate website. There, the team behind the project explained the suspension of the service occurred after months of battling to stay afloat, and ultimately, a court order to wind-up and cease operations immediately.

In its public statement, the company blamed its prior payment service provider (PSP) for this situation. The exchange said it began having issues with banking services in September 2018, after the sudden freeze of its bank accounts in Hong Kong.

In November last year, Gatecoin announced that it would resume operations after resorting to an unnamed European payments processor – ”a fully regulated payment institution by the French regulator” they stated – and a bank in Switzerland.

The team stated:

“Even after we managed to mitigate our loss by replacing that PSP with more reliable alternatives to process our clients’ transfers in September 2018, the situation did not improve because that PSP retained a large part of our funds.”

The exchange finished it’s message assuring customers that it expects to redistribute its remaining assets to the creditors.

Since 2016, the exchange has had a series of troubles unrelated to its banking services, as it lost 185,000 ETH and 250 BTC in a cyber attack. Still, it appears the exchange will become the latest casualty of struggles to obtain adequate financial services.

In March, Bloomberg reported on how industry startups remain unable to even open up standard checking accounts. The article profiled stories from even established cryptocurrency businesses and raised the profile of what appears to be an ongoing issue.

At press time, CoinDesk was unable to obtain the full court order detailing the liquidation process. According to a discussion on a Reddit dedicated to the exchange platform, customers, including those who say they lost funds in the 2016 hack, also appear in the dark on whether they will be reimbursed.

The adoption of cryptocurrencies in Venezuela, first due to hyperinflation and later due to dollarization, could come to play a role in the country’s economic rebuilding.

At least that’s according to Venezuela’s most outspoken economist on the subject of cryptocurrencies, professor Aaron Olmos, who dissected the reasons for his country’s current dependency on the US dollar in a new interview with CoinDesk. A passionate advocate of the benefits of cryptocurrencies, Olmos has lectured about the technology for over two years, even leading a program focused on blockchain for IESA, the most prominent business college in the country.

With several publications, conferences and interviews in national television, the economist has demonstrated a passion for teaching the Venezuelan public about the crypto economy and the implications of its adoption.

In his new interview, Olmos discussed the challenges of the present economic situation, where a devalued Bolivar is used as an official currency, despite alternatives. In his opinion, this situation – a consequence of decades of poor economic administration – has lead to a crisis where the use of cryptocurrencies has been accelerating as the Bolivar’s decline in value sharpens.

He told CoinDesk:

“We are in a complicated situation because ‘good money’ – dollars or cryptocurrency – is available, but it is scarce because people tend to keep it, not spend it. On the other hand our ‘bad money,’ the Bolivar, it’s the one used by law.”

Added to this, the economist pointed out the fact that cash in high denominations is limited, while bills in low denominations with no acquisition power are issued by the central bank.

“This creates a distortion in the price of goods and services since the production value is now based in dollars in the internal market,” he explains. “Everybody knows it: the Bolivar is our official currency in circulation, but the actual functional currency is the US dollar.”

Crypto as a solution

Yet, in the midst of this crisis, Olmos believes cryptocurrency could help form a solution, in part, because adoption “is already happening.”

Along with the reactivation of production and the creation of new sources of investment, the answer to the country’s economic issues could be introducing a double circulation system, similar to the one used in Brazil to overcome its rampant inflation in the 1990s, the Unit of Real Value (URV).

This way, the cryptocurrency would carry part of the burden in commerce and share it with the Bolivar.

“Given the conditions were we need an alternative element of trust, there’s nothing better than a cryptocurrency while an economic policy takes care of making the Bolivar regain value and recover its power,” Olmos said.

Olmos went on to indicate that he does not believe current laws in the Venezuelan Constitution exclude the possibility of using a cryptocurrency for payments as part of a readjustment plan.

“What should be done is to recognize its use and give it some space for development for it to work properly and temporarily,” the economist said, emphasizing the ultimate goal would be to boost the Bolivar’s value. “We could even use it in a digital form.”

When asked about the possible inclusion of the Petro as part of a recovery plan, the economist denies it outright, adding: “The Petro hasn’t worked out because it has a structure based on intervention, power concentration, and forced usage.”

Two visions of one country

Of course, the outcome will be defined by who will make the reins of Venezuela’s future. As Olmos puts it: “From Jan. 10, we have two visions of the same country.”

As the economist recounts, there’s an economic plan for 2019 – 2025 that theoretically includes blockchain and cryptocurrency. “But this document hasn’t been published nor seen by anyone,” he said.

On the other hand, it’s unclear what position will be taken, as the administration in charge, run by the National Assembly’s President, Juan Guaidó, hasn’t issued further opinions about crypto within the context of their plans for Venezuela’s recovery.